Wait a Minute. How Can They Afford That When I Can’t?
nytimes.com
nytimes.com
I'm shocked how often people discover this, and then immediately forget it, and when they rediscover it are just as surprised as ever.
It's like we're ingrained to think there's no luck in the world.
I have almost exactly the opposite mentality w.r.t. this scenario. I was always taught to not talk about money because it will only lead to problems, strife, envy etc.. (not that I'm rich or from a rich family but there's always people on both sides of you money-wise).
Embodied with all the expected toxicity in this article.
Some people are more concerned with displaying 'Image' than whether or not they can keep up with Reality.
This has been historically the difference between 'Old Wealth' and the 'Nouveau Riche'. The Nouveau Riche mentality is that if you have it, you must flaunt it ostentatiously. The people whose families have been wealthy for generations very often don't show it at all, or maybe they have some things that are 'very good' but 'old'. (To take that to its logical conclusion, think "a 40-year-old Rolls Royce".)
My sister always looks like she wouldn't have two cents to rub together, but she keeps several million dollars stashed away so that all of her (4) kids could be given a million bucks at any time if necessary. Note that if she can give it to one child, then she feels she should give it to all four as a matter of 'fairness'. Then again she has three houses, all set up with clothing and furniture and appliances, so that she just has to arrive and everything is available for her immediately.
I remember having the light bulb go off for me—previously I had zero clue and tried not to worry about—that most of those around me doing very well around age thirty had had help with a house down payment and their college costs. So the difference was simply they had the nut to get into home ownership and they didn’t have a monthly student loan.
Then some extra stuff to try to make people feel bad for having wealth.
You could be wondering if you're getting cheated on your salary.
In debt over their eyeballs?
If you know how much someone makes, then you can deduce relatively quickly that they are either a.) in serious amounts of debt, or b.) have some other form of income that you aren’t aware of.
a) up to their eyeballs in debt with no savings of any kind
b) involved in some kind of "scam"
c) were being floated by rich relatives or friends somewhere else, but the story there was complicated
My wife has always been very frugal so I found this curious, but she explained that having a "rich" appearance was very important in the tight night social community that most South Koreans found themselves in. These three versions of what was happening were often occurring at the same time. An example true story:
A person she knew, despite working two jobs as a cashier at a grocery and a dry cleaners, owned an expensive house and drove around in a luxury SUV. This person took payment, in part or in full as cash and often simply didn't pay taxes. At church, they'd chat up friends looking for business opportunities. When one was finally spotted (an investment opportunity), it was realized they didn't have any cash to participate. They then convinced a close friend to loan them basically their life savings upon which the investment was made with "a few percent" skimmed off the top as a finders fee to purchase a few luxury goods to keep the game going. There were multiple investors, and eventually somebody ended up stealing somebody else's identity, drained their bank account and fled the country. The investment ended up buying a large inventory of very poorly made products that were unsalable and it failed. The person she knew ended up with no serious money lost and just moved on to the next strike-it-rich plan.
The house was mortgaged under somebody else's identity who had good credit and income as a "favor". The main floor was furnished elegantly for parties and after church activities, the rest of the house was entirely devoid of furniture. The SUV was a car they bought from a mechanic friend after it had been totaled by the previous owner and had new bodywork and some engine work done at extreme discount -- it barely ran day-to-day.
This wasn't a rare story. It seemed to pervade a large portion of the community and everybody was inexplicably blind to it, and fell for the same money-lending, identity theft scams over and over again.
When the Russell Crowe movie "Cinderella Man" came out, there's a scene where his manager, played by Paul Giamatti, is confronted by the main character's wife at his apartment. It's revealed that the apartment, and fancy lifestyle are all a display to give him credibility. https://youtu.be/e4fb7N_ICj0
It was then that I really understood what the success signaling and veblen goods in my wife's immigrant community was all about.
I also have several Persian friends who seem to piss away money like it's not a thing, but that's the most egregious example. Still, love them to death :)
Mind you, these are sentient, presumably self-aware, humans doing this - this isn't the behavior of a bot in a game, but actual people. Yikes
I do suspect your income is relatively quite high. Where I’m at, a modest apartment alone is more than 20% of any 20-something’s average income.
Now you're saving 180k a year by reducing bleed even though your expenses are the same, etc etc. Compound finance is a helluva drug
Just me? Ah, alright.
You have truly lost touch with average people if you think your situation is even close to normal.
In my friend group at least three families (two with kids) are making under $50k pre-tax income, as households. A couple others are a little over it but not by much. There are three with household incomes way over that and... go figure, each has one tech-sector worker in it. Age ranges of something like 25-36, none in college.
In Amsterdam: cheapest rooms I've found (not apartments, rooms) are 650 euro's. If you can get these you're really lucky.
Salary for entry level is 1600 net. This goes up to about 2300 to 2500 after 3+ years of experience (that's truly the fastest trajectory forecast FYI, it's more like 5 years).
Alright, so let's live somewhere cheaper in The Netherlands. The cheapest I could find that's in reasonable distance of Amsterdam (that's where the jobs are) is about 500 euro's.
So how do you do it? I want what you have as well. Heck, I'd live in a simple garage with very basic amenities if I'd have to.
Edit: I've tried to apply to startups in the US, there are no takers because of the visa restrictions. I've also applied to FAANG, also no takers. I have 3 CS or CS-related degrees (1 bachelor, 2 masters) and 1.5 years of work experience.
The trick to affording things is mostly about earning. Saving definitely has its place, but if you don't earn enough, you can't save it either.
And I know that there are quite some hedge fund managers out there wasting money left and right, but in all honesty, it's tougher to get to that point than just to save.
At least, when you're me. I suppose for some people it's easier to make bank and spend it as much as possible as well. They wouldn't know how to save up.
I mean, that's feekin rad for them.
But as for what that has to do with people I know, or my life?
Plow it away - families change things. Wife, kids, houses are often negative financial ROI (relative to early life), but have some life ROI. People in their 20's are often driven by status, or comparison - and not very good at thinking 30 years down the road. I Keep on...
That's the mentality that often gets people into debt.
(Edit: obviously, yes, if you cant afford it don’t buy it. News is a luxury too, just a much cheaper one. The only things people actually need are food, transportation, housing, &c.)
My only point was that it wasn’t the same type of spending described in the article.